U.S. employers turn to incentive compensation

Staff | November 9, 2012

In lieu of improvements in base pay, more American employers are turning to short-term incentives to reward employees, according to the sixth annual Compensation Planning Survey by Buck Consultants, A Xerox Company.

The survey found that the median salary increase in 2013 will be 3%, as employers continue to exercise caution around salary budgets.

However, the expected size of short-term incentive awards forecast for 2013 is greater than the target payouts for 2012 and actual payouts in 2011 for all employee groups except CEOs. More than half (56%) of the organizations surveyed reported that they plan to offer hiring and retention bonuses, while 56% also indicate they will offer referral bonuses in 2013.

Additionally, stock options are offered to CEOs by 52% of survey respondents, but this type of incentive is available only to other employees at 29% of respondent organizations.

“The results of this survey are similar to past years in terms of compensation—slow growth, lots of challenges and not a lot of money to spend,” said David Van De Voort, a principal with Buck Consultants. “However, we’ve moved past the environment of several years ago when employers were freezing pay and reducing 401(k) matches.”

More than two-thirds (67%) of survey participants cited a focus on retaining top talent in 2013, and more will look to make additions to their workforce. According to the survey, 46% are planning for normal hiring, and 19% will be adding staff.